Changes to the Tier 1 Investor visa route announced
The Home Office has today laid before Parliament its long anticipated Statement of Changes to the Immigration Rules HC1919. The Statement of Changes introduces various reforms to the Tier 1 Investor category designed to better protect against financial crime and ensure that investments are of greater benefit to the UK economy. The changes will come into force on 29 March 2019 and apply to all new investor visa applications made on or after this date. Transitional provisions will apply to Tier 1 Investor visa holders already in the UK on the commencement date (see further details below).
Tier 1 Investor visa category will remain open
The first point to take away from the Statement of Changes is that the Tier 1 Investor visa category is not going to be suspended. The published changes to the rules make clear that the Tier 1 Investor visa category will remain open to new applicants from 29 March 2019.
Changes to initial entry requirements for Tier 1 Investors
The Statement of Changes clarify that only three changes are being made to the initial entry requirements for Tier 1 Investors from 29 March 2019:
- Applicants will need to have held their investment funds for at least 2 years prior to the date of application (but see our analysis of this so-called ‘requirement’ here);
- The Home Office will have power to refuse an application where there are reasonable grounds to believe that the funds have been, or will be, transferred internationally by means which are unlawful in any of the countries involved;
- Applicants will need to provide confirmation from a UK bank that it has carried out all required due diligence checks and Know Your Customer enquiries.
The new rules will not require investors to undergo enhanced checks on their financial situations and business histories, carried out by a UK-regulated auditor, before making a visa application, as was previously anticipated. However, the Home Office has begun engaging with the financial services industry on how such a requirement might work in practice. It is anticipated that such a change may well be brought into the rules at some point in the future.
In practice, these amendments to the Tier 1 Investor rules will present little difficulty for legitimate and genuine Tier 1 Investor visa applicants.
The Home Office has always had power to refuse a Tier 1 Investor visa application if not satisfied that the applicant’s investment funds are lawfully obtained. For this reason, it has always been good practice to provide evidence to demonstrate the provenance of funds covering at least a 2 year period, even though not strictly required by the rules. The new rules therefore merely legislate for something that most genuine investors have already been doing in practice for some time.
Similarly, the current rules afford the Home Office power to refuse a Tier 1 Investor visa application if not satisfied that the applicant is in control of the investment funds or the funds were obtained unlawfully. The new transfer provision merely builds on this power and makes it more explicit.
Equally, the vast majority of UK banks, which for present purposes include FCA regulated investment management firms, only open UK bank accounts after having carried out appropriate due diligence checks and already routinely confirm the same in writing. Again therefore, this change to the Tier 1 Investor visa rules is unlikely to present an obstacle for the legitimate Tier 1 investor.
Changes to requirements for further leave to remain and settlement as a Tier 1 Investor
The Statement of Changes indicate that various technical changes are being made to the requirements for an extension of stay and settlement as a Tier 1 Investor from 29 March 2019:
- Investment in UK government bonds will no longer be permitted;
- Intermediary vehicles will need to be regulated by the FCA and, where an intermediary vehicle is used, evidence will need to be provided of the final investment destination and how the funds were transferred there;
- The definition of ‘active and trading’ companies will be strengthened so that there must be stronger evidence that such companies are trading in the UK;
- It will be clarified that ‘price of investments’ means the price the applicant paid for the investments, not the face value;
- There will be provision for investment in pooled investments which also receive funding from a UK or devolved government department or one of its agencies.
Again, with the possible exception of investments into UK government bonds no longer being permitted, it may be said that the new rules will not alter the requirements for an extension of stay and settlement as a Tier 1 Investor significantly. Indeed, many Tier 1 Investors already opt to invest by way of purchase of loan or share capital in active and trading UK companies and it is worth noting that investment into UK corporate bonds will still be permitted.
Will existing Tier 1 Investor visa holders be affected?
Transitional arrangements are being applied to ensure the above changes regarding 2-year source of funds checks, investment in UK government bonds, FCA regulation of intermediary vehicles and the definition of ‘active and trading’ companies do not have an adverse impact on investors who entered the category under the rules in place before 29 March 2019. These transitional arrangements will continue until 5 April 2023 for extension applications and 5 April 2025 for settlement applications.
The other changes above, which do not alter the requirements of the category substantively, will apply to future extension and settlement applications by investors, including those already in the category.
Contact Our Investment Immigration Barristers
For expert advice and assistance regarding an application for entry clearance, leave to remain or settlement as a Tier 1 Investor, contact our investment immigration barristers in London on 0203 617 9173 or complete our enquiry form below.